When Germany increased fiscal spending and raised interest rates in the early 1990s,
A) economic growth increased throughout Europe.
B) other countries were forced to raise interest rates to stay in the ERM.
C) it was unsuccessful in supporting East Germany.
D) it forced other countries to devalue their currencies.
B
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Some argue that tariffs always hurt the imposing country's economic welfare, and are typically designed to shift resources from one sector to another, protected or preferred one, within an economy. Find and discuss a counter example to this argument
What will be an ideal response?
Suppose a country that has been pegging its currency is faced with a situation where financial market participants now expect some future revaluation. In such a situation, we would generally expect which of the following to occur?
A) an increase in the domestic interest rate B) an announcement by the central bank that a large revaluation will occur in the near future C) an increase in demand for the country's currency D) all of the above E) none of the above